Should Quality-Oriented Investors Explore AUTOMATIC DATA PROCESSING (NASDAQ:ADP)?

In this article we will dive into AUTOMATIC DATA PROCESSING (NASDAQ:ADP) as a possible candidate for quality investing. Investors should always do their own research, but we noticed AUTOMATIC DATA PROCESSING showing up in our Caviar Cruise quality screen, which makes it worth to investigate a bit more.

Why NASDAQ:ADP may be interesting for quality investors.

• The 5-year revenue growth of AUTOMATIC DATA PROCESSING has been remarkable, with 6.36% increase. This showcases the company's strong performance in driving revenue growth and indicates its competitiveness within the market.
• The ROIC excluding cash and goodwill of AUTOMATIC DATA PROCESSING stands at 114.0%, reflecting the company's strong financial management and profitability. This metric underscores its ability to generate favorable returns on the capital invested in its core operations.
• AUTOMATIC DATA PROCESSING maintains a healthy Debt/Free Cash Flow Ratio of 2.05, indicating a strong financial position and prudent debt management. This ratio suggests the company has sufficient free cash flow to cover its debt obligations and highlights its ability to generate cash from operations.
• AUTOMATIC DATA PROCESSING exhibits impressive Profit Quality (5-year) with a 97.19% ratio, reflecting its consistent ability to generate high-quality profits. This metric underscores the company's strong financial performance and commitment to delivering sustainable earnings.
• The 5-year EBIT growth of AUTOMATIC DATA PROCESSING has been remarkable, with 10.53% increase. This demonstrates the company's ability to improve its operational efficiency and indicates its competitiveness within the market.
• With EBIT 5-year growth outpacing its Revenue 5-year growth, AUTOMATIC DATA PROCESSING showcases its effective cost management and enhanced operational performance. This suggests the company's ability to generate higher earnings from its revenue streams.

A complete fundamental analysis of NASDAQ:ADP

ChartMill assigns a Fundamental Rating to every stock. This score, ranging from 0 to 10, is updated daily and is determined by evaluating multiple fundamental indicators and properties.

Taking everything into account, ADP scores 6 out of 10 in our fundamental rating. ADP was compared to 81 industry peers in the Professional Services industry. While ADP has a great profitability rating, there are some minor concerns on its financial health. ADP is quite expensive at the moment. It does show a decent growth rate.

For an up to date full fundamental analysis you can check the fundamental report of ADP

More ideas for quality investing can be found on ChartMill in our Caviar Cruise screen.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.